U.S. business optimism drops in fourth quarter

Grant Thornton International Business Report cites economic uncertainty as the number one constraint to business growth in coming year.
By Modern Materials Handling Staff
January 22, 2014 - MMH Editorial

Optimism for the nation’s economic outlook among U.S. business leaders plummeted 16 percentage points in fourth quarter 2013 to a net balance of 36% according to the latest data from the Grant Thornton International Business Report (IBR), a survey of 3,300 business leaders in 45 countries.

Hiring expectations in the United States declined for the first time in the past year, with a net balance of 38% of business leaders foreseeing an increase in hiring during the coming year, down from 42% the previous quarter. In addition, net 52% of business leaders expect profits to grow, a slight decline from 54%  the previous quarter and a substantial increase from 28% a year ago. U.S. business growth expectations actually improved, with net 65% of businesses expecting to see revenues climb during the next 12 months, up from 50% in third quarter 2013 and up from 38% from the same period last year. However, a net balance of 37% of U.S. businesses leaders cite economic uncertainty as the number one constraint to growing their operations in the next 12 months.

“It’s clear that the recent gridlock in Washington is significantly contributing to the lack of confidence in, and optimism about, our economy among the nation’s business leaders,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Our nation’s political leaders were able to reach a budget agreement, which will likely avert another costly government shutdown and extend the sequester for the next two years. However, they must now turn their attention to embracing a long-term debt ceiling solution combined with comprehensive tax and entitlement reforms that would provide a level of economic certainty that businesses are desperately seeking.”

The notion that the government shutdown affected optimism about the economy correlates with other recent research from Grant Thornton LLP, which indicated that 60% of CFOs believe the state of the U.S. economy will remain the same or worsen during the next six months because of similar uncertainty.

The lack of optimism in the U.S. economy is consistent with what is occurring in other global markets. Global business optimism fell to a net balance of 27%, down five percentage points from third quarter 2013. Optimism among Chinese business leaders declined following a 27 percentage-point increase to net 31% in the previous quarter. In fourth quarter 2013, business optimism in the world’s second largest economy fell to a net balance of 22%.

Brazil business optimism also dropped significantly from a net balance of 31% to 10%, a record low for the IBR. Russian optimism declined from a net balance of 19% to just 1%, its lowest since 2011.



Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Putting the renewed strength in the truckload market into a very positive perspective is a report issued by Avondale Partners analyst Donald Broughton, which was released yesterday. Entitled, “Q2’15 Trucking Capacity; Goldilocks Era Continues,” Broughton explained that in the second quarter only 70 truckload fleets failed, or exited the business. That number may seem high to some, but it is not, especially when you consider that the second quarter of 2014 saw more than five times as many truckload carriers, 375 to be exact, exit the business.

Global demand remains stable as packaging equipment providers of all sizes shift focus

Six straight days without a ship waiting for berth

Freight forwarders were relieved to learn yesterday that U.S. Customs and Border Protection (CBP) would be delaying its Automated Commercial Environment (ACE) implementation.

The Institute for Supply Management’s (ISM) August edition of the Manufacturing Report on Business saw its PMI, the ISM’s index to measure growth, fall 1.6 percent to 51.1, following a 0.8 percent decline to 52.7 in July. Even with the relatively slow growth over the last two months, the PI has been at 50 or higher for 31 consecutive months.

Article Topics

News · Global · Economy · China · Grant Thornton · Brazil · All topics

About the Author

Josh Bond, Senior Editor
Josh Bond is Senior Editor for Modern, and was formerly Modern’s lift truck columnist and associate editor. He has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce University.

Comments

Post a comment
Commenting is not available in this channel entry.